Anyone know about Experience Mods?

Question

I work in Commercial Insurance and have been asked to do a report on Experience Modification Factors by my boss. Just starting out in the industry and taking tests for liscensing in next 2 months. Books that could be recommended would be wonderful I have 2 weeks to do this and just found out this morning.

Answer 1

As others have mentioned, experience modification calculations are used in workers compensation (and general liability, to a lesser extent) to provide rating credit or debit to an individual risk based upon that risk's loss experience in comparison to the average risk. Insurance rates are based on "expected" losses for a given risk. If a risk's actual losses are less than they were expected to be, they earn a credit or discount on their insurance premiums. If the actual losses are more than expected, they would earn a debit or surcharge. There are insurance textbooks that can provide more detail. If you can find a text dealing with WC rate making or acturial practices, they may be of use. I wrote a short paper on WC experience rating a year or so ago for some "in-house" training at my company. I would be happy to e-mail a copy to you, if you'd like.

Answer 2

Experience mods are used for GL and workers comp insurance. It takes loss history into account and charges a mod. The mod could either be a credit or debit depending on the loss history of the insured.

http://www.cutcomp.com/mod.htm
http://www.modmanager.com/basics.html
http://www.pinnacol.com/pdf/ExperienceModificationExplained.pdf

Answer 3

Experience, or ex, mods, have to do with factors that modify insurance premiums. They are common for worker's compensation insurance, where the premium amount is modified based on a company's experience, i.e., the number of work-related injuries/illness they experience. You may also see them in other types of insurance (for example, homeowner's insurance in New Orleans post-Katrina probably has a significant ex mod factor.)

Try Amazon for pertinent books - here's one I found:
http://www.amazon.com/Ultimate-Compensation-Insurance-Entrepreneur-Magazines/dp/1932531505/ref=sr_1_1/102-1535319-8617721?ie=UTF8&s=books&qid=1174326586&sr=1-1

Good luck!

Answer 4

I think Pictorals have something on this. Is it like, commercial auto experience mod calculations? Or Workers Comp? It DOES vary by line of business.